MUMBAI: Spentex Industries Ltd (SIL) has acquired Uzbekistan firm Tashkent-To’yetpa Tekftil Ltd for Rs 380 crore.
The government of Uzbekistan has given Spentex, the Rs 362 crore Delhi-based textile firm, a number of incentives, including 15% discount on raw cotton, exemption on corporate taxes, customs duty and VAT.
Tashkent-To’yetpa Tekftil Ltd, a state-owned spinning company, has a combined capacity of 2.2 lakh spindles and 236 jet airlooms, which would make Spentex India’s largest spinning enterprise with an installed capacity of over 5.7 lakh spindles.
The acquisition consideration would be payable over a period of four years and the company’s topline would be in the range of Rs 700-800 crore from their core textiles business.
Talking to DNA Money, Mukund Choudhary, managing director, Spentex Industries, said: “The acquisition is in line with our inorganic growth strategy. We are also considering possible acquisition in Egypt and other cotton-producing countries due to low cotton and labour costs though we have not zeroed in on any company. But we will seal an Egyptian deal by the end of current fiscal.” Analysts feel that Uzbekistan is the world’s fifth largest cotton producer with 4% share of total output. With proximity to Eastern European markets and availability of quality cotton locally, it makes strategic sense for Spentex to be present in Uzbekistan. It would also benefit from low labour and power costs in Uzbekistan. Moreover, due to the merger of Indo Rama Textiles and Amit Spinning, substantial profits are forthcoming and will be reflected in the company current fiscal results.
The company has decided to raise Rs 175 crore from the international or the domestic markets through the issue of Foreign Currency Convertible Bonds (FCCBs) or other securities.
The company is investing around Rs 120 crore to increase its cotton yarn capacity by 36,000 spindles at our facility in Baramati (Maharashtra). At present, it is producing 6,600 metric tonnes of yarn per month.
Spentex Industries is the textiles arm of CLC Group which has interests in textiles and power. The group companies include Indo Rama Textiles, Amit Spinning Industries, CLC Global, CLC Corporation and Indus Merchandising. The company has six plants, including Pune and the Indore and Nagpur plants of Indo Rama.
